What’s driving employers to convert to self-funding health care strategies, and more importantly, what’s stopping others?
By Emily Payne | February 01, 2021 at 10:09 AM
Although a whopping 98% of respondents believe a self-funding strategy will be best for their customers in the long-term, half still see the majority of their business coming from fully insured. (Image: Shutterstock)
“It’s not you, it’s me.” It’s a breakup conversation that’s long overdue for employers still clinging to their fully insured health insurance plan. Unfortunately, too many employers are avoiding that conversation and still tricking themselves into thinking their relationship is solid.
“Traditional models no longer work, and the brokers and consultants on the frontlines are encouraging their clients to look at self-funded options for their benefit and the benefit of their employees,” said Keith Lemer, CEO of WellNet, commenting on the results of WellNet’s first annual Self-Insured Survey. “To educate and empower both the consultants and their clients, we must provide more awareness, education and research behind the successful adoption of alternative funding strategies that have a massive impact on the cost, quality and access to care.”
In a recent webinar moderated by Lemer, industry experts delved into the survey results and discussed what’s driving employers to adopt this cost-saving strategy for health care benefits, and possibly more importantly, what’s stopping others.
Breaking up is hard to do
“What it really comes down to as a main hesitation is fear of the unknown,” said panelist Veronica Verona, vice president of All Atlantic Benefits. “Unknown financial risk, not understanding claims/utilization data… it’s hard to outline and convey to a company how it looks on paper and the value there.”
Indeed, according to WellNet’s survey, although a whopping 98% of respondents believe a self-funding strategy will be best for their customers in the long-term, half still see the majority of their business (60% or more) coming from fully insured. The biggest challenge, of course, is fear of change. Much like dating, employers are often swayed by the allure of stability and comfort with the relationship they know, even if it’s not quite everything they want.
“It’s what we had done,” admitted Chris Ourisman, CEO of Ourisman Automotive, on why his company had stayed with a fully insured model for so long before switching to self-funded. “There was comfort in the painstaking mediocrity of what the benefit was.”
To be fair, fully insured providers do have their good qualities, aside from stability. “The BUCAHs do two things incredibly well,” noted panelist Rob Wheeler of Carlyle Group. “They really have developed the brokerage universe as a sales channel that is incentivized through a variety of mechanisms.
“Two, they inject just enough uncertainty into the renewal process to make you defer the decision for a year and stay with them,” he added. “Just long enough to make you feel certain and put together a good timeline for transition. At the end of the day, they win by virtue of decisions deferred.”
It’s up to brokers to tear off clients’ rose-colored glasses and help them realize there’s something better. “What we hear from our fully insured clients is frustration,” Verona said. “Year over year, you’re getting an increase, you don’t have the data to understand whether that increase is warranted. Self-insured, it’s transparent. You have the data, and with that data you can take action.”
If self-funded health plans had a dating profile…
The best way to convince clients to make the leap to self-funded is to really promote the benefits that matter most to them. “A lot of people focus on the structural costs-savings just moving to self-funding provides, but it’s so much more than that,” said Wheeler. “It’s a key enabler to any long term health care strategy–access to data, flexibility around plan design, the ability to carve out prescription drugs. It gives you control of your own health insurance benefits program.”
Indeed, while managing high-cost claims is a top priority for survey respondents’ clients (82%), it’s not the only thing that matters. After targeting specialty drug costs (72%), improving patient engagement (50%) rounded out many employers’ top three.
“Savings perhaps is like a lubricant for a decision maker to go into a space that otherwise their mind is telling them not to,” Ourisman said. “Cost is just this entry point to be willing to explore. But creating a culture of health is priority one, two and three.”
Ourisman said he wants his employees to take health care benefits for granted and view them “as a right and not a benefit,” He wants them to complain and push for change and, “really, have an expectation that it can be better.”
Self-funding isn’t without its faults, though survey data suggests that clients might not have an accurate perception of what those are. The belief that self-funding exposes the company to too much risk is a top driver of hesitancy among businesses, cited by 52% of respondents.
“It wasn’t until I was really sat down and someone asked, ‘what are you scared about?’ and I was able to communicate it and hear, ‘This is not the case,’’’ Ourisman said. “It became clear what the actual risks were.”
“I’ve found that having this conversation with companies, employers tend to be hesitant in the beginning,” Verona agreed. “The best way to ease into this is by approaching it from the standpoint of, ‘I’m not taking anything away, but rather, I’m giving something.’”
Emily Payne is managing editor at BenefitsPRO. A Wisconsin native, she spent the past eight years writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.